Research & Insight

Global Emerging Markets continue to benefit from the extension of the “risk trade”. In November, the MSCI Emerging Market index rose by 4.3%, outperforming the MSCI AC World index (+3.9%). MSCI Latam led the charge rising by 8.3% over the month, while Asia and EMEA lagged rising by “just” 3.1% and 2.9% respectively.

After the correction in late October, Asian equities managed a small rise in November despite the problems in Dubai, Greece and Iran.

Dubai has recently announced that state owned holding company Dubai World is to restructure $26 billion of its outstanding debt liabilities. Given the timing and the level of market surprise, there are potentially further ramifications for many related and non-related parties. The fallout following this event has already been felt in the portfolio valuations of investment managers across the globe, but what are the wider implications for investors, Dubai, the region and emerging markets generally?

We are taking some profits off the table in Brazil, reducing its weight within Rexiter’s global emerging markets portfolios. What a year and what a breathless ride it has been!

October proved to be a volatile month for equity markets as investors began to assess the relative merits of the "reflation trade" in light of the expectations of higher interest rates in 2010 and of a potentially prolonged period of time before any significant earnings recovery emerges. The MSCI Emerging Markets index resumed its positive momentum during the first two weeks of October and reached a new 12 month high by mid month (MSCI EM index level 975.9, +6.75%) before some profit taking saw the market finish flat. The market has now rallied over 95% from its low in March 2009, but remains 33.0% off its high in November 2007.